Fund Lobby Urges European Harmonization Of Hedge Fund Laws

Dec 1 2005 | 9:38pm ET

The European Fund and Asset Management Association has called for harmonization of rules governing hedge funds and funds-of-hedge funds across the European Union, and the European Central Bank has repeatedly said any rules to harmonize policy need be made with the cooperation of U.S. regulators.

The EFAMA, which represents asset managers who control an estimated €2 trillion (US$14.1 trillion), warned in a report published this week that the lack of consistent hedge fund regulation in Europe is stifling the region's economic growth.

"There is not one homogeneous European hedge fund market and that is keeping back economic growth," said Roberta D'Apice, head of legal affairs at the Italian Association of the Asset Management Industry and co-author of the report.

The EFAMA's report presents two options for streamlining hedge fund laws, including one that would harmonize the characteristics of hedge funds and funds-of-hedge funds at the European level, and another that would create pan-European rules about what type of investor is permitted to invest in hedge funds or funds-of-hedge funds.

Meanwhile, European Central Bank has stated that any new rules would have to be made in collaboration with the U.S. because many of the hedge funds doing business in Europe are managed there. However, Charlie McCreevy, internal market commissioner for the European Commission, has repeatedly stated that he is opposed to "excessive" new legislation on the issue.

According to the association, experts in Brussels are currently studying what steps should be taken to bring some harmonization to the disparate rules.

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